Where We Are Now
As previously explained, the last major period of destroying and restructuring happened in 1930-45, which led to
the new period of building and the new world order that began in 1945 with the creation a new global monetary
system (built in 1944 in Bretton Woods, New Hampshire) and a new American-dominated system of world
governance (located the United Nations in New York and the World Bank and the International Monetary Fund in
Washington, DC). The new American world order was the natural consequence of the US being the richest country
(it then had 80% of the world’s gold stock and gold was then money), the dominant economic power (it then
accounted for about half of world production), and the strongest military power (it then had a monopoly on nuclear
weapons and the strongest conventional forces).
It is now 75 years later, and we are classically near the end of a long-term debt cycle when there are large debts
and classic monetary policies don’t work well for the world’s reserve currency central banks. This is happening as
we are simultaneously in a deep economic and debt contraction that is producing income and balance sheet holes
for people, companies, nonprofit organizations, and governments, while politically fragmented central
governments are trying to fill in these holes by giving out a lot of money that they are borrowing. Central banks
are helping them do that by monetizing government debt. All this is happening at the same time that there are big
wealth and values gaps and there is a rising world power that is competing with the leading world power in trade,
technology development, capital markets, and geopolitics. And on top of all this, we have a pandemic to contend
with.
At the same time, we have great human capital and thinking technologies that can help us see how to best deal
with these challenges and do the inevitable restructurings well. If we can all deal with each other well, we will
certainly get past this difficult time and move on to a new prosperous period that will be quite different.
In the next chapters of Part 1, I will more closely look into the histories and mechanics of the most important of the
17 drivers and will conclude by attempting to squint into the future.
I will try to pass along pieces of this study to you about once a week until we reach the point of diminishing
returns.
 
[1] These indices were made up of a number of different statistics, some of which were directly comparable and
some of which were broadly analogous or broadly indicative. In some cases, a data series that stopped at a certain
point had to be spliced with a series that continued back in time. Additionally, the lines shown on the chart are 30-
year moving averages of these indices, shifted so that there is no lag. I chose to use the smoothed series because
the volatility of the unsmoothed series was too great to allow one to see the big movements. Going forward, I will
use these very smoothed versions when looking at the very long term and much less smoothed or unsmoothed
versions when looking at these developments up close, because the most important developments were best
captured this way.
[2] We show where key indicators were relative to their history by averaging them across the cases. The chart is
shown such that a value of “1” represents the peak in that indicator relative to history and “0” represents the
trough. The timeline is shown in years with “0” representing roughly when the country was at its peak (i.e., when
the average across gauges was at its peak). In the rest of this section, we walk through each of the stages of the
archetype in more detail. While the charts show the countries that produced global reserve currencies, we’ll also
heavily reference China, which was a dominant empire for centuries, though it never established a reserve
currency.